Question

If the simple interest on $800 for 3 years is $60, what is the rate of interest per annum

Answer 1

2.5%

Explanation:

Given:

• Principle: $800
• Time: 3 years
• Simple interest: $60

Formula:

Simple interest = (Principle × Rate × Time)/100

Substitute the principle, time and the interest in the formula to determine the rate of interest per annum.

`\implies 60 = \frac{ (800 * \text{Rate} * 3)}{100}`

Divide 100 to 800 as 800 is the only number in the equation that is divisible by 100.

`\implies 60 ={ (800 / 100)* \text{Rate} * 3}`

`\implies60 ={ 8* \text{Rate} * 3}`

Simplify both sides of the equation:

`\implies60 ={ 24* \text{Rate}}`

Divide both sides by 24.

`\implies(60)/(24) =\frac{{ 24* \text{Rate}}}{24}`

Simplify both sides as needed:

`\implies(60)/(24) = \text{Rate}`

`\implies(60 / 12)/(24 / 12) = \text{Rate}`

`\implies \text{Rate} = (5)/(2) = 2.5`

Thus, the rate of interest per annum is 2.5%.

Answer 2

2.5%

Explanation:

Simple interest formula

I = Prt

where:

• I = total interest
• P = principal
• r = interest rate (in decimal form)
• t = time (in years)

Given:

• I = $60
• P = $800
• t = 3 years

Substituting given values into the formula and solving for r:

⇒ 60 = 800 · r · 3

⇒ 60 = 2400r

⇒ r = 0.025

Converting r to percentage:

0.025 × 100% = 2.5%